The blue lower panel indicator is the “Bollinger Band Width” measure which subtracts the upper fourth standard deviation from the lower fourth standard deviation.

The current “Bollinger Band Width” is 96.44 points, meaning there are 96 S&P 500 points between the top fourth and the bottom fourth standard deviation from the mean.

Note that this is among the lowest readings in the chart and the highest reading here – observed in November – was above 450.

You can visually see the clear “wave” or up/down/up/down/up pattern (high/low/high/low) in this indicator.

So what is the current situation and what is likely to be the future?

The Yellow Highlights draw your attention to the previous periods of low relative volatility as indicated by compressions in the Bollinger Bands.

Compare each event and the immediate future outcome.

Each time price compressed into a visual low volatility environment, a breakout and impulse (price moving multiple days in the same direction) occurred following the compression.

Sometimes the movement was up and sometimes the movement was down; again, volatility is easier to “predict” than direction.

The current reading suggests that we may have a few more days of compression or low volatility conditions ahead of a likely future expansion in volatility and thus multiple-day movement in the same direction.

We can visualize an upside breakout triggering stop-losses of the short-sellers, resulting in a powerful short-squeeze like that of May and November 2014 and then February 2015.

However, a downside break and increase in volatility to the sell-side opens a bearish expansion price pathway like that of February, April, July, and October 2014.

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